T transfers a building ($90,000 market value, $40,000 basis), plus a $60,000 nonrecourse debt on the building, to a partnership in exchange for a 30 percent capital interest valued at $30,000.The partnership has no other debt.T's basis in his partnership interest is

Question

Quizplus · Accepted Answer

The basis of T's partnership interest is equal to the basis of the property transferred to the partnership, reduced by the amount of any liabilities assumed by the partnership. In this case, T transferred a building with a basis of $40,000 and a nonrecourse debt of $60,000. The partnership assumed the nonrecourse debt, so T's basis in his partnership interest is $40,000 - $60,000 = $12,000.

T Transfers a Building ($90,000 Market Value, $40,000 Basis), Plus